REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is made and entered into as of January 27, 2011 by and between WES CONSULTING, INC. , a Florida corporation (the “Company”), and DMITRII SPETETCHII , an individual resident of the Republic of Moldova (the “Investor”).

 

WITNESSETH :

WHEREAS , reference is made to that certain Stock Purchase Agreement dated January 27, 2011, by and among the Company, Web Merchants, Inc., a Delaware corporation (“Web Merchants”), Fyodor Petrenko (“Petrenko”) and the Investor (the “Purchase Agreement”), pursuant to which Petrenko and the Investor have agreed to sell all of their shares of capital stock of Web Merchants to the Company in exchange for the payment of cash and the issuance of shares of the common stock, par value $.01 per share, of the Company to Petrenko and the Investor;

 

WHEREAS , in connection with the transactions contemplated by the Purchase Agreement, the Company has agreed to provide to the Investor the registration rights set forth in this Agreement; and

 

WHEREAS , the Investor would not consummate the transactions contemplated by the Purchase Agreement absent the execution and delivery by the Company of this Agreement, which is an exhibit to the Purchase Agreement; and

 

WHEREAS , as soon as practicable following the Closing (as such term is defined in the Purchase Agreement), but in no event later than within ninety (90) days following the Closing, the Company shall use its best efforts to file with the SEC a registration statement, registering the resale of Common Stock, such registration statement to include Two Million (2,000,000) shares of the Common Stock to be received by Spetetchii, as provided in this Agreement.

 

NOW, THEREFORE , in consideration of the foregoing recitals and the mutual covenants contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor, each intending to be legally bound, hereby agree as follows:

 

SECTION 1.  REGISTRATION RIGHTS .

1.1             Certain Definitions . As used in this Agreement, in addition to the terms defined above, the following terms shall have the following respective meanings:

“Commission” shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

“Common Stock” shall mean the Company’s common stock, par value $.01 per share.

 

 

“Other Stockholders” shall mean persons or entities other than the Investor who, by virtue of agreements with the Company, are entitled to include their securities in a registration effected pursuant to this Agreement.

“Public Offering” shall mean the effectiveness of the filing of a registration statement under the Securities Act that covers the offer and sale of the Common Stock by the Company to the public or by the Company or a placement agent on an agency or best efforts basis to a selected number of investors.

“ register ,” “ registered” and “ registration ” refer to the effectiveness of a registration statement prepared and filed in compliance with the Securities Act.

“Registrable Securities”   as of any particular time shall mean all shares of Common Stock; provided , however , that Registrable Securities shall not include any shares of Common Stock that have previously been registered or that have been sold to the public, or that have been sold in a private transaction by the Investor or any Other Stockholders.

“Registration Expenses”   shall mean all expenses incurred by the Company in complying with Subsections 1.2 and 1.3 hereof, including, without limitation, all registration and filing fees; printing expenses; fees and disbursements of counsel for the Company; reasonable fees and expenses of a single counsel for the Investor; state “blue sky” fees and expenses; and accountants’ expenses, including, without limitation, any special audits incident to or required by any such registration; but excluding Selling Expenses, the compensation of regular employees of the Company, which shall be paid in any event by the Company, and excluding also any additional disbursements of counsel for the Investor or any Other Stockholders, which shall be paid by the Investor or such Other Stockholders.

“Securities Act”   shall mean the federal Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at any particular time.

“Securities Exchange Act” shall mean the federal Securities Exchange Act of 1934, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at any particular time.

“Selling Expenses”   shall mean all underwriting discounts and selling commissions applicable to the sale of Registrable Securities and any other securities of the Company being sold in the same registration as the Registrable Securities by the Investor or any Other Stockholders.

 

 

1.2            Piggyback Registration .

(a)            If the Company registers any of its securities in connection with a Public Offering on a form that would permit the registration of the Registrable Securities, the Company shall (i) promptly give to the Investor written notice of such registration (a “Piggyback Registration”) (which shall include a list of the jurisdictions in which the Company intends to attempt to qualify such securities under the applicable blue sky or other state securities laws); (ii) use its best efforts to include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, if any, up to Two Million (2,000,000) shares of the Registrable Securities owned and held by the Investor, except as set forth in Subsection 1.2(b) hereof; and (iii) cause to be included in such registration statement and use its best efforts to cause to be registered under the Securities Act all the Registrable Securities referred to in this Section 1.2(a) owned and held by the Investor. Notwithstanding the foregoing, the Company shall have the right to withdraw or cease to prepare or file any registration statement for any offering referred to in this Subsection 1.2(a) without any obligation or liability to the Investor.

(b)           Subject to Subsections 1.2(d) and 1.3 below, the Investor shall be entitled to have the Registrable Securities referred to in Section 1.2(a) hereof included in an unlimited number of Piggyback Registrations pursuant to this Subsection 1.2.

(e)           If the Company has previously filed a registration statement with respect to Registrable Securities   pursuant to this Subsection 1.2 or pursuant to Subsection 1.3 hereof, and if such previous registration has not been withdrawn or abandoned, the Company will not file or cause to be effected any other registration of any of its equity securities or securities convertible or exchangeable into or exercisable for its equity securities under the Securities Act (except on Form S-8 or any successor form), whether on its own behalf or at the request of any holder or holders of such securities, until a period of one hundred eighty (180) days has elapsed from the effective date of such a previous registration.

(d)           If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Investor as a part of the written notice given pursuant to Subsection 1.2(a)(i) hereof.  In such event, the right of the Investor to registration pursuant to Subsection 1.2(a) shall (i) be conditioned upon the Investor’s participation in such underwriting and the inclusion of the Investor’s Registrable Securities in the underwriting to the extent provided herein and (ii) terminate as to the Investor upon the availability of Rule 144 (as hereinafter defined) to the Investor and the Investor holding not more than two percent (2%) of the outstanding Registrable Securities.  The Investor (should he propose to distribute his securities through such underwriting) shall (together with the Company and Other Stockholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for underwriting by the Company.  Notwithstanding any other provision of this Subsection 1.2, if the underwriter reasonably determines that marketing factors require a limitation on the number of shares to be underwritten, the securities of the Company held by the Investor and the Other Stockholders shall be excluded from such registration pro rata on the basis of the number of their shares to be included in the registration, to the extent so required by such limitation. The Company shall advise all holders of securities requesting registration as to the number of shares or securities that may be included in the registration and underwriting as allocated in the foregoing manner.  No such reduction shall be made with respect to securities offered by the Company for its own account.  If the Investor or any Other Stockholder disapproves of the terms of any such underwriting, then such person may elect to withdraw therefrom by written notice to the Company and the underwriter.  Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall also be withdrawn from such registration.

 

 

1.3          Requested Registration .

 

(a)           If the Company has not filed a registration statement with respect to any Registrable Securities within ninety (90) days after the date hereof, then subject to the conditions of Subsection 1.3(b) hereof and in lieu of the registration rights granted to the Investor pursuant to Subsection 1.2 hereof, the Investor may make one (1) demand (and one (1) demand only) on the Company to register all of the Registrable Securities of such Investor (a “Demand Registration”).

(b)          In the event the Company shall receive from the Investor a written request that the Company effect a Demand Registration with respect to all of the Registrable Securities held by the Investor, other than a registration pursuant to Rule 415 under Regulation C promulgated under the Securities Act, the Company shall:

(i)           promptly give written notice of the proposed registration to all Other Stockholders; and

(ii)          as soon as practicable, use its diligent best efforts to effect such registration (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable “blue sky” or other state securities laws, and appropriate compliance with applicable regulations issued under the Securities Act) as may be so requested and as would permit or facilitate the sale and distribution of such portion of such Registrable Securities as is specified in such request, together with such portion of the Registrable Securities of any Other Stockholder joining in such request as is specified in a written request given after receipt of written notice from the Company; provided , however , that the Company shall not be obligated to take any action to effect any such registration pursuant to this Subsection 1.3:

(A)           in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

(B)           during the period following a Public Offering that is contemplated by Subsection 1.10 hereof; or

(C)           during the period starting with the date that is sixty (60) days prior to the Company’s good faith estimate of the date of filing of, and ending on a date one hundred eighty (180) days after the effective date of, a Company-initiated underwritten registration for an all-cash offer price, provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective.

In the event the Company is not obligated to effect any requested registration by virtue of the foregoing clauses (A) through (C), such request shall not be deemed to be a demand for registration for purposes of Subsection 1.3(a) hereof.  Subject to the foregoing clauses (A) through (C), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable after receipt of the request of the Investor; provided , however, that if the Company shall furnish to the Investor a certificate signed by the Chairman of the Board of the Company stating that in the good-faith judgment of the Board of Directors of the Company it would be detrimental to the Company and its stockholders for such registration statement to be filed and it is therefore essential to defer the filing of such registration statement, the Company shall have the right to defer such filing (except as provided in clause (C) above) for a period of not more than one hundred eighty (180) days after receipt of the request of the Investor.

 

The registration statement filed pursuant to the request of the Investor may, subject to the provisions of Subsection 1.3(c) below, include securities offered by the Company for its own account and/or other securities of the Company that are held by Other Stockholders.

(c)            If the Investor intends to distribute the Registrable Securities covered by his request by means of an underwriting, he shall so advise the Company as a part of his   request made pursuant to Subsection 1.3(a) hereof and the Company shall include such information in the written notice referred to in Subsection 1.3(b)(i) hereof.  The right of any Other Stockholder to registration shall be conditioned upon such Other Stockholder’s participation in such underwriting and the inclusion of such Other Stockholder’s Registrable Securities in the underwriting (unless otherwise mutually agreed by the Investor and such Other Stockholder) to the extent provided herein.

If the Company shall request inclusion in any registration pursuant to this Subsection 1.3 of securities being sold for its own account, or if Other Stockholders shall request inclusion in any registration pursuant hereto, then, subject to the last sentence of this Subsection 1.3(c) with respect to the Company’s request, the Investor shall, on behalf of all Other Stockholders, offer to include such securities in the underwriting and may condition such offer on their acceptance of the further applicable provisions of this Section 1. The Company shall (together with the Investor and the Other Stockholders proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form and containing customary terms reasonably acceptable to the Investor, with the representative of the underwriter or underwriters selected for such underwriting by the Company and reasonably acceptable to the Investor; provided , however , that if the Company has not selected an underwriter reasonably acceptable to the Investor within thirty (30) days after the Company’s receipt of the request for registration from the Investor, then the Investor may select an underwriter reasonably acceptable to the Company in connection with such registration. Notwithstanding any other provision of this Subsection 1.3, if the underwriter representative advises the Investor in writing that marketing factors require a limitation of the number of shares to be underwritten, then the securities of the Company held by Other Stockholders shall first be excluded from such registration to the extent so required by such limitation. The Company shall advise all holders of securities requesting registration as to the number of shares of securities that may be included in the registration and underwriting as allocated in the foregoing manner. If any Other Stockholder who has requested inclusion in such registration as provided above disapproves of the terms of the underwriting, then such person may elect to withdraw therefrom by written notice to the Company, the underwriter and the Investor. The securities so withdrawn shall also be withdrawn from registration. If the underwriter has not limited the number of shares to be underwritten, then the Company may include its securities for its own account in such registration if the underwriter so agrees and if the number of Registrable Securities and other securities of the Other Stockholders that would otherwise have been included in such registration and underwriting will not be limited thereby.

1.4            Expenses of Registration .   All Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to this Agreement shall be borne by the Company; and all Selling Expenses shall be borne by the Investor and the Other Stockholders of the securities so registered pro rata on the basis of the number of their shares so registered; provided , however ,   that the Company shall not be required to pay any Registration Expenses if, as a result of the withdrawal from registration by the Investor or Other Stockholders pursuant to Subsection 1.2(d) or Subsection 1.3 hereof, the registration statement does not become effective, in which case the withdrawing party shall bear such Registration Expenses (except for the fees of any counsel for the Investor, which shall be borne only by the Investor); provided further , however , that such registration shall not be counted as a registration pursuant to Subsection 1.3(a) hereof; and provided further , however ,   that if any jurisdiction in which the securities shall be qualified shall require that expenses incurred in connection with the qualification of the securities in that jurisdiction be borne by the selling stockholders, then such expenses shall be payable by the selling stockholders pro rata to the extent required by such jurisdiction.

1.5            Registration Procedures .   In the case of each registration effected by the Company pursuant to this Agreement, the Company shall keep the Investor advised in writing as to the initiation of each registration and as to the completion thereof.  At its expense, the Company shall use its best efforts to:

(a)           keep such registration effective for a period of one hundred twenty (120) days or until the Investor has completed the distribution described in the registration statement relating thereto, whichever first occurs; and

(b)           furnish such number of prospectuses and other documents incident thereto as the Investor from time to time may reasonably request.

1.6           Indemnification .

(a)           The Company shall indemnify the Investor, and shall also indemnify each underwriter, if any, and each person who controls (as defined in Subsection 1.6(d) below) any underwriter, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of any rule or regulation promulgated under the Securities Act applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and shall reimburse the Investor, each such underwriter, and each person who controls such underwriter, for any legal and other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action; provided , however ,   that the Company shall not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based upon written information furnished to the Company by the Investor or underwriter seeking to be indemnified, where such information is stated to be specifically for use in such prospectus, offering circular or related document. It is agreed that the indemnity agreement contained in this Subsection 1.6(a) shall not apply to amounts paid in settlement of any such claim, loss, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld).

 

(b)            The Investor and each Other Stockholder shall, if securities held by him or it are included among the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors and officers, each underwriter, if any, of the Company’s securities covered by such a registration statement, each person who controls (as defined in Subsection 1.6(d) below) the Company or such underwriter, and each Other Stockholder and each of such controlling person’s officers, directors and partners, and each person controlling such Other Stockholder and each of such controlling person’s officers, directors and partners, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse the Company and such Other Stockholders, directors, officers, partners, persons, underwriters and control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by the Investor or such Other Stockholder specifically for use therein; provided , however , that the obligations of the Investor or Other Stockholder hereunder shall be limited to an amount equal to the proceeds to the Investor or Other Stockholder of securities sold as contemplated herein. It is agreed that the indemnity agreement contained in this Subsection 1.6(b) shall not apply to amounts paid in settlement of any such claim, loss, damage, liability or action if such settlement is effected without the consent of the Investor or Other Stockholder (which consent shall not be unreasonably withheld).

(e)            Each party entitled to indemnification under this Subsection 1.6 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not be withheld unreasonably), and the Indemnified Party may participate in such defense at such Indemnified Party’s expense. The failure of any Indemnified Party to give notice as provided herein shall relieve the Indemnifying Party of its obligations under this Subsection 1.6 only if such failure is prejudicial to the ability of the Indemnifying Party to defend such action, and such failure shall in no event relieve the Indemnifying Party of any liability that he or it may have to any Indemnified Party otherwise than under this Subsection 1.6.  No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability with respect to such claim or litigation.

(d)           For purposes of this Subsection 1.6, the term “control” shall have the meaning assigned thereto under the Securities Act.

 

1.7             Information by the Investor and Other Stockholders .   The Investor or each Other Stockholder of securities included in any registration shall furnish to the Company such information regarding the Investor or such Other Stockholder and the distribution proposed by the Investor or any Other Stockholder as the Company may request in writing and as shall be required in connection with any registration, qualification or compliance referred to in this Agreement.

1.8             Rule 144 Reporting .   With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Common Stock to the public without registration, the Company shall:

(a)           make and keep public information available as those terms are understood and defined in Rule 144 promulgated by the Commission under the Securities Act (“Rule 144”), at all times after ninety (90) days following the first Public Offering by the Company after the date hereof;

(b)           file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Securities Exchange Act at any time after it has become subject to the reporting requirements thereunder; and

(c)           so long as the Investor owns any securities constituting or representing Registrable Securities, furnish to the Investor forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time after ninety (90) days following the first Public Offering by the Company after the date hereof), and of the Securities Act and the Securities Exchange Act (at any time after it has become subject to the reporting requirements thereunder), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company as the Investor may reasonably request in availing itself of any rule or regulation of the Commission allowing the Investor to sell any such securities without registration.

1.9             No Transfer of Registration Right.   The rights to cause the Company to register securities of the Company hereunder may not be assigned by the Investor.

1.10          “Market Stand-Off” Agreement .   If requested by the Company upon the recommendation of the Board of Directors of the Company and an underwriter of Common Stock (or other securities) of the Company, the Investor shall not sell or otherwise transfer or dispose of any Common Stock (or other securities) of the Company held by him during the ninety (90) day period following the effective date of a registration statement of the Company filed under the Securities Act, provided that:

(a)           such agreement shall apply only with respect to an underwritten Public Offering (whether such offering was initiated by the Company or the Investor); and

(b)           Other Stockholders selling securities pursuant to such registration statement and all officers and directors of the Company enter into similar agreements.

 

Such agreement shall be in writing in form satisfactory to the Company and such underwriter. The Company may impose stop-transfer instructions with respect to the shares (or securities) subject to the foregoing restriction until the end of said ninety (90)-day period.

SECTION 2.          REPRESENTATIONS AND WARRANTIES .

2 . 1            Representations and Warranties of the Company .   The Company represents and warrants to the Investor as follows:

(a)            The execution, delivery and performance of this Agreement by the Company have been duly authorized by all requisite corporate action and will not violate any provision of law, any order of any court or other agency of government, the Articles of Incorporation or Bylaws of the Company, or any provision of any material indenture, agreement or other instrument to which it or any of its properties or assets is bound, or conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any such material indenture, agreement or other instrument, or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Company.

(b)           This Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency and other similar laws affecting the enforceability of creditors’ rights generally, general equitable principles, the discretion of courts in granting equitable remedies and public policy considerations.

2 . 2            Representations and Warranties of the Investor .   The Investor represents and warrants to the Company as follows:

(a)           The execution, delivery and performance of this Agreement by the Investor will not violate any provision of law, any order of any court or any agency or government, or any provision of any material indenture or agreement or other instrument to which he or any of his properties or assets is bound, or conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any such material indenture, agreement or other instrument, or result in the creation or imposition of any lien, charge, or encumbrance of any nature whatsoever upon any of the properties or assets of the Investor.

(b)           This Agreement has been duly executed and delivered by the Investor and constitutes the legal, valid and binding obligation of the Investor, enforceable against the Investor in accordance with its terms, subject to applicable bankruptcy, insolvency and other similar laws affecting the enforceability of creditors’ rights generally, general equitable principles, the discretion of courts in granting equitable remedies and public policy considerations.

SECTION 3.          MISCELLANEOUS .

3.1             Governing Law .   This Agreement shall be governed by and construed under the laws of the State of Georgia, without giving effect to any principles of conflicts of laws.

 

3.2             Survival .   The representations, warranties, covenants and agreements made herein by the parties shall survive the closing of the transactions contemplated hereby or the Purchase Agreement.

3.3             Successors and Assigns . Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.

3.4             Notices, etc .   All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by United States first-class mail, postage prepaid, or delivered personally by hand or nationally recognized courier addressed (a) if to the Investor, as indicated on the signature page hereto or at such other address as the Investor shall have furnished to the Company in writing, or (b) if to the Company, at 2745 Bankers Industrial Drive, Atlanta, GA 30360, or at such other address as the Company shall have furnished to the Investor in writing.  All such notices and other written communications shall be effective on the date of mailing or delivery.

3.5             Delays or Omissions; Remedies Cumulative .   No delay or omission to exercise any right, power or remedy accruing to Investor, upon any breach or default under this Agreement, shall impair any such right, power or remedy of Investor, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  All of Investor’s remedies, either under this Agreement or by law or otherwise afforded to Investor, shall be cumulative and not alternative.

3.6             Expenses .   The Company shall bear its own expenses and legal fees incurred on its behalf with respect to this Agreement and the transactions contemplated hereby and all expenses and disbursements of its legal counsel reasonably incurred.

3.7             Titles and Subtitles .   The titles of the sections, paragraphs. and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

3.8             Counterparts .   This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

3.9             Timely Performance .   Time is of the essence as to the performance of the obligations required of the respective parties under this Agreement.

 

[Signatures Next Page]

 

IN WITNESS WHEREOF , the parties have executed this Registration Rights Agreement, individually or through its duly authorized officer, as the case may be, all as of the date first written above.

 

 

  

VOTING AGREEMENT

THIS VOTING AGREEMENT , dated as of January 27, 2011 (this “Agreement”), is made by and among WES CONSULTING, INC. , a Florida corporation (“Corporation”), FYODOR PETRENKO , an individual resident of the State of New Jersey (“Petrenko”), and LOUIS S. FRIEDMAN , an individual resident of the State of Georgia (“Friedman”).

 

WITNESSETH :

WHEREAS , this Agreement is being delivered pursuant to that certain Stock Purchase Agreement, dated as of January 27, 2011 (the “Purchase Agreement”), by and among the Corporation, Petrenko, Web Merchants, Inc., a Delaware corporation (“Web Merchants”) and Dmitrii Spetetchii, pursuant to which, among other things, Petrenko has agreed to sell all of his shares of capital stock of Web Merchants to the Corporation in exchange for the issuance of shares of the common stock, par value $.01 per share, of the Corporation (the “Common Stock”);

 

WHEREAS , as a result of the transactions contemplated by the Purchase Agreement, Petrenko will own 25,394,400 shares of Common Stock;

 

WHEREAS , Friedman is the President and Chief Executive Officer of the Corporation and owns 28,394,376 shares of Common Stock;

 

WHEREAS , the Corporation is in the process of amending its Articles of Incorporation to create Series A Convertible Preferred Stock, par value $.001 per share (the “Preferred Stock”), and promptly following the amendment of its Articles of Incorporation, the Corporation will issue 4,300,000 shares of the Preferred Stock to Friedman, and

 

WHEREAS , Friedman and Petrenko have agreed to enter into this Agreement and to restrict their right to vote their shares of Preferred Stock and Common Stock, as well as any additional shares of the voting capital stock of the Corporation subsequently acquired by them, in accordance with the terms and conditions of this Agreement.

 

NOW, THEREFORE , in consideration of the premises and of the mutual promises set forth herein, and other good and valuable consideration, the adequacy, receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

SECTION 1.       Definitions; Construction . For purposes of this Agreement, the following terms shall have the following meanings:

 

(a)           “ Affiliate ” shall mean, with respect to a Person, any Person which controls, is controlled by or is under common control with such Person and any officer, director, shareholder or employee of such Person and any member of the Immediate Family of any natural person.

 

(b)           “ Board ” shall mean the board of directors of the Corporation.

 

(c)           “ Director ” shall mean a member of the Board.

  

  

(d)           “ Corporation ” shall mean WES Consulting, Inc., a Florida corporation, and any corporation that shall succeed to the business and assets of the Corporation in a transaction (such as a merger, consolidation, or reorganization) in which the Stock of the Corporation is converted into capital stock of such successor corporation.

 

(e)           “ Immediate Family ” shall mean, with respect to any natural person, such natural person’s spouse, lineal descendants, grandparent or grandparents, parent or parents, brother or brothers, and sister or sisters, in every case including, as appropriate, adoptive relationships.

 

(f)           “ Person ” means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or association, a limited liability company, a limited liability partnership, or a government entity (or any department, agency, or political subdivision thereof).

 

(g)           “ Stock ” shall mean the authorized shares of the Common Stock, the authorized shares of the Preferred Stock, and any other authorized shares of capital stock of the Corporation (of whatever kind, class or designation), whether now or hereafter authorized, if such shares generally have the right to elect Directors of the Corporation.

 

Throughout this Agreement, the words “own”, “owns” or “ownership” shall include the ownership of all shares by such Person, whether beneficially, as defined in Rule 13d-3 promulgated pursuant to the Securities Exchange Act of 1934, as amended, or of record.

 

S ECTION 2.      General Prohibition Against Transfers . Neither Friedman nor Petrenko shall sell, assign, pledge, dispose of, hypothecate, or otherwise transfer (whether by operation of law or otherwise), or encumber any interest in his Stock (“Proposed Transfer”), except in accordance with the terms of this Agreement.

 

SECTION 3.      Permitted Transfers . The provisions of Section 2 hereof shall not apply to a Proposed Transfer of Stock to or for the benefit of (i) any trust for the sole benefit of Friedman or Petrenko, (ii) any Proposed Transfer made in compliance with the terms of Sections 5 and 6 hereof, or (iii) any Immediate Family of Friedman or Petrenko upon his adjudication by a court of competent jurisdiction that he is permanently incompetent to manage his person or property; provided , however , that any such transferees shall take such Stock subject to all restrictions, terms and conditions of this Agreement and shall execute and deliver to the Corporation a written confirmation of the same prior to acquiring such Stock.

 

SECTION 4.      Board Composition; Election of Officers; Governance Matters .

 

(a)           As soon as practicable after the consummation of the transactions contemplated by the Purchase Agreement, Friedman and Petrenko shall take all such actions with respect to the voting of all shares of Stock now owned and held or hereafter acquired by either of them to cause there to be elected as Directors (i) Friedman and Petrenko or a designee selected by each of Friedman and Petrenko, and (ii) one (1) additional Director mutually designated by Friedman and Petrenko, it being expressly understood that Ron Scott (“Scott”) shall serve as such mutual designee for so long as Scott remains an employee of the Corporation.

  

  

(b)           At such time as the shareholders of the Corporation have increased the number of Directors serving on the Board to four (4) Directors, Friedman and Petrenko shall take all such actions with respect to the voting of all shares of Stock now owned and held or hereafter acquired by either of them to cause there to be elected as Directors (i) Friedman and Petrenko or a designee selected by each of Friedman and Petrenko, and (ii) one (1) additional Director designated by each of Friedman and Petrenko.

 

(c)           At such time as the shareholders of the Corporation have increased the number of Directors serving on the Board to five (5) Directors, Friedman and Petrenko shall take all such actions with respect to the voting of all shares of Stock now owned and held or hereafter acquired by either of them to cause there to be elected as Directors (i) Friedman and Petrenko or a designee selected by each of Friedman and Petrenko, (ii) one (1) additional Director mutually designated by Friedman and Petrenko, it being expressly understood that Scott shall serve as such mutual designee for so long as Scott remains an employee of the Corporation; and (iii) one (1) additional Director designated by each of Friedman and Petrenko.

 

(d)           All other and additional Directors serving on the Board shall be appointed and elected as provided in the Articles of Incorporation and Bylaws of the Corporation.

 

(e)           Friedman and Petrenko may each remove any Director designated by him for any reason or for no reason, and if a Director designated by Friedman or Petrenko is removed, resigns, dies or otherwise ceases to be a Director, for any reason or for no reason, then Friedman or Petrenko, as the case may be, shall be entitled to designate the Person to replace such Director designated by Friedman or Petrenko for the remainder of his or her unexpired term. In the event that Directors shall be entitled to fill a vacancy on the Board, then Friedman and Petrenko agree to cause their respective representative Directors to vote to fill such vacancy in accordance with the immediately preceding sentence.

 

(f)           Friedman and Petrenko further agree to cause their designated Directors serving on the Board:

 

(1)           to elect and appoint Friedman as the President and Chief Executive Officer of the Corporation, Petrenko as the Executive Vice President of the Corporation, and Scott (or such other Person as Friedman and Petrenko shall mutually designate) as the Secretary and Chief Financial Officer of the Corporation, with such duties and responsibilities as provided in the Articles of Incorporation and Bylaws of the Corporation and the resolutions and written instructions of the Board; and

 

(2)           to restrict the officers of the Corporation from taking any of the following actions on behalf of the Corporation without the prior approval of the Board:

 

(i) the sale, lease, encumbrance, loan, exchange or other transfer of the assets of the Corporation other than in the usual and regular course of business;

 

(ii) the creation of any liability by or on behalf of the Corporation, whether actual or contingent, in excess of $50,000.00, including, but not limited to, any loan, guarantee, or other agreement which may result in indebtedness to the Corporation; provided that such limitation shall not apply to any liability incurred in connection with the purchase of inventory, in each case incurred in the ordinary course of the Corporation’s business consistent with past practice;

  

  

(iii) making any loan or advance to, or otherwise providing funds or credit to or for, any other Person;

 

(iv) entering into any agreement not in the usual and regular course of the Corporation’s business;

 

(v) organizing a subsidiary or acquiring an equity or other interest in any other Person, or entering into a joint venture or strategic alliance;

 

(vi) making any investment, by way of capital contribution or otherwise, in or with any Person except (I) investments and direct obligations of, or instruments unconditionally guaranteed by, the United States of America or in certificates of deposit issued by, and time deposits with, a commercial bank having capital and surplus in excess of one (1) billion dollars; (II) investments in any money market account maintained with a financial institution; (III) demand deposit accounts maintained in the ordinary course of business; (IV) commercial papers rated A-1 or better by Standard and Poor’s Corporation of P-1 or better by Moody’s Investor Services, Inc.;

 

(vii) making capital expenditures in any fiscal year in excess of the level approved by the Board in the capital budget adopted by the Board for that fiscal year;

 

(viii) issuing, distributing, redeeming, retiring, purchasing, acquiring or selling any equity or debt securities of the Corporation or apply any of its property to any of the foregoing except as otherwise provided in this Agreement;

 

(ix) declaring or paying any dividends, or setting apart any sum for the payment of any dividends on, or making any other distribution or reduction of capital otherwise in respect of, any shares of the Common Stock, except as otherwise provided in this Agreement;

 

(x) changing the Corporation’s current lines of business or entering into any new line of business;

 

(xi) retaining any attorney, accountant, investment banker, financial advisor or person performing a similar function to represent or provide services to the Corporation;

 

(xii) authorizing or approving the budget for the Corporation;

 

(xiii) authorizing or entering into any agreement or arrangement (whether or not in writing) between the Corporation and any of its officers, directors, shareholders or affiliates;

  

(xiv) filing, or consenting by answer otherwise to the filing against it, of a petition for relief or reorganization or arrangement or any other petition in bankruptcy or insolvency under the laws of any jurisdiction, making an assignment for the benefit of its creditors or consenting to the appointment of a custodian, receiver, trustee or other officer with similar powers for itself or for any substantial part of its assets or taking or omitting any other action which would result (with the giving of notice or passage of time or both) in the Bankruptcy of the Corporation or any of its subsidiaries; or

 

(xv) agreeing (whether or not in writing) to do any of the foregoing;

 

provided , however , that nothing in this Section 4(c)(2) shall be deemed to restrict the authority of the Board to oversee the management of the Corporation as provided in the Articles of Incorporation and Bylaws of the Corporation and applicable law.

 

(g)           Neither Friedman nor Petrenko shall vote their shares of Stock now owned and held or hereafter acquired by either of them, or vote in their respective capacities as Directors of the Company, to approve or consent to the undertaking of any of the following actions, unless Friedman or Petrenko shall have first obtained the affirmative vote or written consent of the other (which affirmative vote or consent shall not be unreasonably withheld or delayed):

 

  (1)           the transfer, sale, conveyance or assignment of all or substantially all of the assets of the Corporation (or contract for or suffer or permit any of the foregoing), including, without limitation, options to purchase and so called “installment sales contracts,” “land contracts,” or “contracts for deed”);

 

  (2)           the merger or consummation of any share exchange with any other Person pursuant to which the Corporation will not be the surviving Person in such transaction;

 

  (3)           the amendment or modification of this Agreement, the Articles of Incorporation or the Bylaws of the Corporation;

 

  (4)           the undertaking generally of any act which is in contravention of this Agreement;

     

  (5)           the subdivision of the Stock, by split up or otherwise, or combination of the Stock;

 

  (6)          the issuance of additional shares of the Stock other than in connection with Stock that is issuable under current commitments, including but not limited to stock options, convertible debt, payment agreements, and warrants; and

 

  (7)           the filing of a voluntary petition or otherwise initiate proceedings (i) to have the Corporation adjudicated insolvent or, (ii) seeking an order for relief of the Corporation as debtor under the United States Bankruptcy Code (11 U.S.C. §§ 101 et seq. ); the filing of any petition seeking any composition, reorganization, readjustment, liquidation, dissolution or similar relief under the present or any future federal bankruptcy laws or any other present or future applicable federal, state or other statute or law relative to bankruptcy, insolvency, or other relief for debtors with respect to the Corporation; or the seeking of the appointment of any trustee, receiver, conservator, assignee, sequestrator, custodian, liquidator (or other similar official) of the Corporation or of all or any substantial part of the Corporation’s property; or the making of any general assignment for the benefit of creditors of the Corporation; or the admission in writing of the inability of the Corporation to pay its debts generally as they become due; or the declaration of or otherwise effecting a moratorium on the Corporation’s debt or take any action in furtherance of any proscribed action.

  

  

(h)           The parties hereto agree to work together and take all actions necessary or advisable to carry out the intent of this Agreement and to give maximum effect to the provisions hereof, including, without limitation, the calling of special meetings of the shareholders of the Corporation and the amendment of the constituent documents of the Corporation, as may be necessary or advisable.

 

SECTION 5.      Right of First Refusal .

 

(a)           Neither Friedman nor Petrenko shall make any Proposed Transfer of all or any portion of his Stock now owned and held or hereafter acquired to any Person other than as provided in Section 3 hereof unless he has first complied with the provisions of this Section 5 and Section 6 hereof.  Neither Friedman nor Petrenko shall make a Proposed Transfer of all or any portion of his Stock now owned and held or hereafter acquired to any Person other than as provided in Section 3 hereof, in one or more related transactions, unless (i) such shareholder (the “Selling Shareholder”) has received a bona fide written offer (the “Purchase Offer”) from the proposed transferee of the Selling Shareholder’s Stock (the “Purchaser”) to purchase all or any portion of the Selling Shareholder’s Stock (the “Offered Shares”), which offer shall be in writing signed by the Purchaser, and (ii) the Selling Shareholder first offers to sell to the other shareholder hereunder (the “Refusal/Co-Sale Shareholder”) the Offered Shares.  Prior to making any Proposed Transfer that is subject to this Section 5, the Selling Shareholder shall give the Refusal/Co-Sale Shareholder written notice (the “Offer Notice”) which shall include (1) the identity of the Purchaser, (2) a copy of the Purchase Offer, and (3) an offer (the “Offer”) to sell to the Refusal/Co-Sale Shareholder the Offered Shares upon the same terms and conditions as those provided for in the Purchase Offer.  The Offer shall be irrevocable for a period of ten (10) days following receipt by the Refusal/Co-Sale Shareholder of the Offer Notice (the “Offer Period”).

(b)           At any time during the Offer Period, the Refusal/Co-Sale Shareholder may, in lieu of accepting such Selling Shareholder’s right of co-sale pursuant to Section 6 hereof, accept the Offer of the Offered Shares by giving written notice to the Selling Shareholder of such acceptance. If the Refusal/Co-Sale Shareholder accepts the Offer, the closing of the sale of the Offered Shares shall take place within sixty (60) days after the Offer is accepted by the Refusal/Co-Sale Shareholders or, if later, the date of closing set forth in the Purchase Offer.  At such closing, the Selling Shareholder will deliver certificates for such Offered Shares against payment of the purchase price therefor, and the Selling Shareholder shall deliver, and the Refusal/Co-Sale Shareholder will acquire, the Offered Shares free and clear of all liens, pledges, encumbrances, restrictions and security interests of any kind.

  

(c)           If the Refusal/Co-Sale Shareholder does not accept the Offer, or if the Refusal/Co-Sale Shareholder does not purchase all of the Offered Shares pursuant to the Offer, by the expiration of the Offer Period (and the Refusal/Co-Sale Shareholder also elects not to sell pursuant to the Co-Sale Notice pursuant to Section 6 hereof), then the Selling Shareholder may sell the remaining Offered Shares to the Purchaser at any time within ninety (90) days after the last day of the Offer Period, provided that such sale (i) shall be made on terms no less favorable to the Selling Shareholder than the terms contained in the Purchase Offer, and (ii) may only be made to the Purchaser identified in the Purchase Offer.  In the event that the Offered Shares are not sold in accordance with the terms of the immediately preceding sentence, the Offered Shares shall again be subject to all of the conditions and restrictions of this Agreement.  Any Proposed Transfer by the Selling Shareholder after the last day of the ninety-day period referred to in this Section 5(c) or without strict compliance with the terms, provisions and conditions of this Section 5 and the other terms, provisions and conditions of this Agreement, shall be null and void and of no force or effect.

SECTION 6.      Right of Co-Sale .

(a)           If the Selling Shareholder pursuant to Section 5 hereof proposes to make a Proposed Transfer of all or any portion of his Stock now owned and held or hereafter acquired to any Person other than as provided in Section 3 hereof, in one or more related transactions, then such Selling Shareholder shall, in addition to the Offer Notice pursuant to Section 5 hereof, promptly give written notice (the “Co-Sale Notice”) to the Refusal/Co-Sale Shareholder, contemporaneous with the Offer Notice referred to in Section 5 hereof.  The Co-Sale Notice shall contain substantially the same information as the Offer Notice, including, without limitation, the Co-Sale Shares to be transferred, the nature of such Proposed Transfer, the consideration to be paid, and the name and address of each Purchaser.

(b)           In lieu of the rights of the Refusal/Co-Sale Shareholder pursuant to Section 5 hereof, the Refusal/Co-Sale Shareholder shall have the right, exercisable upon written notice to the Selling Shareholder during the Offer Period referred to in Section 5(a) hereof, to participate in such Proposed Transfer on the same terms and conditions specified in the Co-Sale Notice.  To the extent that the Refusal/Co-Sale Shareholder exercises such right of participation in accordance with the terms and conditions set forth below, the percentage of Co-Sale Shares that the Selling Shareholder may sell in the transaction shall be correspondingly reduced.  The Refusal/Co-Sale Shareholder shall effect his participation in the Proposed Transfer by promptly delivering for transfer to the Purchaser his Stock which he elects to sell.  If the Refusal/Co-Sale Shareholder exercises the right set forth in this Section 6(b), then the Selling Shareholder and the Refusal/Co-Sale Shareholder may each sell all or any part of their respective Stock equal to the product obtained by multiplying (1) the Co-Sale Shares covered by the Co-Sale Notice by (2) a fraction, the numerator of which is the number of shares of Stock owned by each shareholder at the time of the Proposed Transfer, and the denominator of which is the aggregate number of shares of Stock of both shareholders at the time of the Proposed Transfer.

(c)           The Stock delivered pursuant to Section 6(b) hereof shall be transferred to the Purchaser in consummation of the sale of the Stock pursuant to the terms and conditions specified in the Co-Sale Notice, and the Selling Shareholder shall concurrently therewith remit to the Refusal/Co-Sale Shareholder that portion of the sale proceeds to which the Refusal/Co-Sale Shareholder is entitled by reason of his participation in such sale.  To the extent that any Purchaser prohibits such assignment or otherwise refuses to purchase any of the Stocks from the Refusal/Co-Sale Shareholder, the Selling Shareholder shall not sell to such Purchaser any Co-Sale Shares unless and until, simultaneously with such sale, the Selling Shareholder shall purchase such Stock from the Refusal/Co-Sale Shareholder.

  

(d)           The exercise or non-exercise of the rights of the shareholders hereunder to participate in one or more sales of Co-Sale Shares shall not adversely affect their respective rights to participate in subsequent sales of Co-Sale Shares subject to Section 6(a) hereof.

(e)           If the Refusal/Co-Sale Shareholder elects not to participate in the sale of the Co-Sale Shares subject to the Co-Sale Notice within the Offer Period referred to in Section 6(a) hereof (and fails to respond to the Offer Notice or rejects the Offer pursuant to Section 5 hereof), then the Selling Shareholder shall be free for a period of ninety (90) days after the expiration of the Offer Period to transfer the Co-Sale Shares to the Purchaser thereof for the same or greater price and on the same terms and conditions as set forth in the Co-Sale Notice.  If the Selling Shareholder does not transfer the Co-Sale Shares within the ninety-day period referred to in this Section 6(e), then the Selling Shareholder’s right to transfer the Co-Sale Shares pursuant to this Section 6 shall terminate.

SECTION 7.      Preemptive Rights .   If, prior to any firm commitment underwritten offering by the Corporation of shares of the Common Stock to the public pursuant to an effective registration statement under the Securities Act of 1933, as amended, or any subsequent Federal statute thereto, the Corporation shall issue any equity securities consisting of the Common Stock or other equity securities convertible into the Common Stock, each of Friedman and Petrenko shall be entitled to purchase the portion of such Common Stock or other equity securities to be issued that is necessary in order that the aggregate shares of the Common Stock held by Friedman or Petrenko constitutes the same percentage of all of the Common Stock (assuming the conversion, exercise or exchange of all convertible equity securities) after the issuance of such Common Stock or convertible equity securities as before the issuance thereof; provided ,   however , that such preemptive right shall not apply to (a) issuances of the Common Stock or equity securities convertible into the Common Stock upon the conversion, exercise or exchange of equity securities issued in compliance with the provisions of this Section 7, (b) issuances of the Common Stock or equity securities convertible into the Common Stock in connection with an exercise of the preemptive rights granted hereunder, (c) issuances of Common Stock or equity securities to a Person pursuant to the terms of any stock options, warrants or other equity securities convertible into the Common Stock that are issued and outstanding on the date hereof or any stock option, warrant or convertible security plan or policy approved by Friedman and Petrenko and the Directors designated by Friedman and Petrenko, or (d) issuances of Common Stock or equity securities, approved by Friedman and Petrenko and the Directors designated by Friedman and Petrenko, to a Person in connection with a business relationship as long as the primary purpose of such issuance is not equity financing.  The price of securities which Friedman and Petrenko each becomes entitled to purchase by reason hereof shall be the same price at which such securities are offered to others.  Friedman or Petrenko may exercise his right under this Section 7 to purchase the Common Stock or other equity securities convertible into the Common Stock by paying the purchase price therefor at the principal office of the Corporation within thirty (30) days after receipt of notice from the Corporation (which notice by the Corporation shall be given at least thirty-five (35) days before the issuance of the Common Stock or other equity securities convertible into the Common Stock) stating the number or amount of the Common Stock or other equity securities convertible into the Common Stock that the Corporation intends to issue and the price and characteristics thereof.  Friedman and/or Petrenko shall pay such purchase price in cash or by check; provided , however , that if the Corporation is indebted to Friedman or Petrenko, then Friedman or Petrenko shall be entitled, at his sole option, to credit against the purchase price all or any portion of the Corporation’s indebtedness to him which is then due.  Friedman’s and Petrenko’s contractual preemptive rights hereunder shall be deemed to be exercised immediately prior to the close of business on the day of payment of the purchase price in accordance with the foregoing provisions, and at such time Friedman and/or Petrenko shall be treated for all purposes as the record holder of the equity securities, as the case may be.  As promptly as practicable (and in any event within five (5) days) after the purchase date, the Corporation shall issue and deliver at its principal office a certificate or certificates for the number of full shares of the Common Stock or the number of full shares or amount, whichever is applicable, of other equity securities convertible into the Common Stock, together with cash for any fraction of a share or portion of such other equity security at the purchase price to which Friedman or Petrenko is entitled hereunder.

  

SECTION 8.       Termination . This Agreement shall terminate upon the occurrence of any of the following events:

 

(a)           the Corporation shall have (i) applied for or consented to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its assets; (ii) made a general assignment for the benefit of its creditors, (iii) commenced a voluntary case under the Federal Bankruptcy Code of 1978 (“Code”); (iv) filed a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding-up or composition or readjustment of debts, (v) failed to controvert within 60 days or in a timely and appropriate manner, or acquiesced in writing to, any petition filed against it in an involuntary case under the Code, or (vi) taken any corporate action for the purpose of effecting the foregoing;

 

(b)           the written consent of Friedman and Petrenko;

 

(c)           either Friedman or Petrenko owns fifty percent (50%) or less of the shares of Stock that he owns as of the date hereof; and

 

(d)           the date of death of Friedman or Petrenko.

 

Upon the termination of this Agreement, Friedman and Petrenko may each surrender to the Corporation the certificates representing his Stock, and the Corporation shall issue to him in lieu thereof new certificates for an equal number of shares without the endorsement set forth in Section 13 hereof.

 

SECTION 9.      Corporation Actions . The Corporation agrees that it will not make any transfer of shares of Stock on the Corporation’s stock transfer books except in accordance with, and otherwise will not take any action with respect to the issuance of certificates representing shares of Stock to any proposed transferee that violates, the terms of this Agreement. The Corporation agrees to so instruct its transfer agent as to the requirements of this provision and to issue shares of Stock with the legend set forth in Section 13 hereof, as appropriate.

  

  

SECTION 10.    Binding Effect . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors, assigns, heirs and legal representatives.

 

SECTION 11.    Applicable Law . This Agreement shall be governed by and construed in accordance with the substantive laws of the State of Georgia, without regard to application of the conflicts of laws principles of such jurisdiction. The respective obligations of the parties hereunder shall be subject to compliance with all applicable laws and regulations including, without limitation, the laws of the State of Georgia.

 

SECTION 12.    Counterparts . This Agreement may be executed in any number of counterparts all of which together shall constitute one and the same instrument.

 

SECTION 13.    Legends . Each certificate representing shares of Stock owned or held by Friedman or Petrenko shall have, in addition to any other legends which may be required or appropriate, endorsed thereon legends in substantially the following forms:

 

“These securities are subject to the provisions of that certain Voting Agreement among the corporation, the holder named on this certificate and certain other stockholders of the corporation, as the same shall be amended from time to time, and no transfer hereof may be made in violation thereof. A copy of said Agreement is available for inspection at the offices of the corporation.”

 

SECTION 14.    Notices . All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made as of the date delivered, mailed or transmitted, and shall be effective upon receipt, if delivered personally, mailed by registered or certified mail (postage prepaid, return receipt requested) to the parties at the following addresses (or at such other address for a party as shall be specified by like changes of address) or sent by electronic transmission to the telecopier number specified below:

 

(a)           If to the Corporation or Friedman:

 

WES Consulting, Inc.

2745 Bankers Industrial Drive

Atlanta, GA 30360

Attn:                      Louis S. Friedman, President

Facsimile: [TO COME]

 

(b)           If to Petrenko:

 

Mr. Fyodor Petrenko

1095 Cranbury S. River Rd., Suite 7

Jamesburg, NJ  08831

Facsimile: [TO COME]

  

    

SECTION 15.    Severability . The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

 

[Signatures Next Page]

  

IN WITNESS WHEREOF , the parties have executed this Voting Agreement, individually or through its duly authorized officer, as the case may be, all as of the date first written above.

 

  

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “ Agreement ”) is entered into on January 27, 2011 (the “ Effective Date ”) by and between FYODOR PETRENKO , an individual resident of the State of New Jersey (“ Executive ”), and WES CONSULTING, INC. , a Florida corporation (the “ Company ”).  Each of the Executive and the Company is at times referred to in this Agreement individually as a “ Party ” and collectively as the “ Parties ”.

WHEREAS , pursuant to the terms and conditions of that certain Stock Purchase Agreement, dated as of even date herewith (the “ Purchase Agreement ”), by and among the Company, Web Merchants, Inc., a Delaware corporation (“ WMI ”), the Executive, and Dmitrii Spetetchii, the Executive will sell his all of his shares of common stock of WMI to the Company; and

 

WHEREAS , in connection with the consummation of the transactions contemplated by the Purchase Agreement, the Company desires to employ the Executive as a Vice President of the Company and the President of WMI, a wholly owned subsidiary of the Company, effective as of the Closing Date (as such term is defined in the Purchase Agreement), subject to the terms and conditions set forth in this Agreement.

NOW , THEREFORE , in consideration of the foregoing, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereby agree as follows:

1.            Employment . Executive will serve as an Executive Vice President of the Company and as President of WMI, a wholly owned subsidiary of the Company, for the Employment Term specified in Section 2 below. Executive will report to the Board of Directors of the Company (the “ Board ”), and Executive will render such services, consistent with the foregoing role, as the Board may from time to time direct (the “ Duties ”).

2.            Term . The employment of Executive pursuant to this Agreement shall commence on the Closing Date and shall continue through the end of the calendar year (the “ Employment Term ”), unless earlier terminated as provided in this Agreement. The Employment Term shall automatically be extended for additional one-year (1) periods commencing on January 1st of each year and continuing each year thereafter, unless earlier terminated as provided in this Agreement, or either Executive or the Company gives the other written notice, in accordance with Section 15(a) at least sixty (60) days prior to the then scheduled expiration of the Employment Term, of such Party’s intention not to extend the Employment Term.

3.            Salary . As compensation for the services rendered by Executive under this Agreement, the Company shall pay to Executive an initial base salary equal to $150,000.00 per year (the “ Base Salary ”) for calendar year 2011, payable to Executive in accordance with the Company’s customary payroll practices. The Base Salary shall be subject to adjustment by the Board but may not be decreased unless it is part of a documented strategic measure required by the Company to meet deteriorating financial or economic conditions.

4.            Bonus . In addition to his Base Salary, Executive shall be entitled to participate in the Company’s executive bonus program. Bonuses shall be paid in accordance with the guidelines set forth under the bonus program adopted by the Board as such program may be adopted in the future.

 

5.            Executive Benefits .

(a)           Employee and Executive Benefits . Executive will be entitled to receive all benefits provided to senior executives, executives and employees of the Company generally, provided that in respect to each such plan Executive is otherwise eligible and insurable in accordance with the terms of such plans and applicable law.

(b)          PTO . Executive shall be entitled to Paid Time Off and holidays in accordance with the existing policies of the Company, as the same may be amended from time to time.

(c)         Relocation. Executive shall be entitled to relocation assistance to move his residence to the Metro-Atlanta, Georgia area in the form of (i) reimbursement of moving expenses of up to $5,000, and (ii) a monthly payment in the amount equal to the cost of maintaining the Executive’s prior residence for the lesser of (A) three (3) months, or (B) the end of any contractual requirement to maintain the residence by the Executive.

6.           Severance Benefits .

(a)           Required Termination Notice . Either the majority vote of the Board of Directors or Executive may terminate this Agreement and Executive’s employment at any time, with or without Business Reasons (as defined in Section 13(a) below), in its or his sole discretion, upon sixty (60) days’ prior written notice of termination.

(b)           Involuntary Termination . If, at any time during the term of this Agreement, other than following a Change in Control to which Section 6(c) applies, a majority vote of the Board of Directors terminates the employment of Executive without Business Reasons or a Constructive Termination occurs, then Executive shall be entitled to receive the following:

(i)            salary and the cash value of any accrued Paid Time Off (consistent with the Company’s Paid Time Off policies then in effect) through the Termination Date plus continued salary for a period of nine (9) months following the Termination Date, payable in accordance with the Company’s regular payroll schedule as in effect from time to time;

(ii)           an amount equal to the average of the bonuses paid to Executive during the two (2) preceding fiscal years or, if no bonuses were paid during such period, an amount equal to Executive’s then current annual target bonus for the fiscal year in which the termination occurs, which shall be payable within thirty (30) days of such termination of employment;

 

(iii)           acceleration of vesting of all outstanding stock options and other equity arrangements (including, but not limited to, restricted stock, stock appreciation rights, and other equity incentives) subject to vesting and held by Executive subject to this provision; provided, however, that the acceleration shall not cover more than two (2) years from the Termination Date (and in this regard, all such options and other exercisable rights held by Executive shall remain exercisable for ninety (90) days following the Termination Date, or through the original expiration date of the stock options or other exercisable rights, if earlier);

(iv)          to the extent COBRA shall be applicable to the Company, continuation of health benefits for Executive, Executive’s spouse and any dependent children, at Executive’s cost, for the period required by law after the Termination Date, provided that the Executive makes the appropriate election and payments; and

(v)           no other compensation, severance or other benefits, except only that this provision shall not limit any benefits otherwise available to Executive under Section 6(c) in the case of a termination following a Change in Control.

(c)           Change in Control . If at any time during the term of this Agreement a “ Change in Control ” occurs (as defined below), and the Company terminates the employment of Executive without Business Reasons or a Constructive Termination occurs within the three (3) months prior to or eighteen (18) months following the date of the Change in Control, then Executive shall be entitled to receive the following:

(i)            salary and the cash value of any accrued Paid Time Off (consistent with the Company’s Paid Time Off policies then in effect) through the Termination Date plus an amount equal to eighteen (18) months of Executive’s salary as then in effect, payable immediately upon the Termination Date;

(ii)            an amount equal to the greater of the average of the bonuses paid to Executive during the two (2) preceding fiscal years or Executive’s then current annual target bonus for the fiscal year in which the termination occurs, which shall be payable within thirty (30) days of such termination of employment;

(iii)           acceleration of vesting of all outstanding stock options and other equity arrangements (including, but not limited to, restricted stock, stock appreciation rights, and other equity incentives) subject to vesting and held by Executive subject to this provision; provided, however, that the acceleration shall not cover more than two (2) years from the Termination Date (and in this regard, all such options and other exercisable rights held by Executive shall remain exercisable for ninety (90) days following the Termination Date, or through the original expiration date of the stock options or other exercisable rights, if earlier);

(iv)          to the extent COBRA shall be applicable to the Company, continuation of health benefits for Executive, Executive’s spouse and any dependent children, at Executive’s cost, for a period of eighteen (18) months after the Termination Date, subject to such extensions as may be available under federal law;  and

 

(v)            no other compensation, severance or other benefits.

 

(d)          Limitation on Parachute Payments . The Executive’s severance payments and other benefits to be received in connection with a Change in Control under this Agreement or otherwise (commonly referred to collectively as “parachute payments”) are capped at no more than three (3) times his average annual compensation for the previous five (5) years to the extent necessary for him not to incur excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended (the “ Code ”), and for the Company not to have its deduction limited under Section 280G of the Code. In the event that the parachute payments to be received by the Executive need to be reduced to comply with the foregoing limitation, the Company shall determine which parachute payments shall be reduced and the extent of each reduction, each in a manner that will not cause a violation of Section 409A of the Code.  If it is subsequently determined that the parachute payments actually received by the Executive exceed the foregoing limitation, then the Executive shall have an obligation to pay the Company upon demand an amount equal to the excess.

(e)           Termination for Disability . If, at any time during the term of this Agreement, other than following a Change in Control to which Section 6(c) applies, Executive shall become unable to perform his Duties as an employee as a result of incapacity, which gives rise to termination of employment for Disability, then Executive shall be entitled to receive the following:

(i)            salary and the cash value of any accrued Paid Time Off (consistent with the Company’s Paid Time Off policies then in effect) through the Termination Date plus continued salary for a period of eighteen (18) months following the Termination Date, payable in accordance with the Company’s regular payroll schedule as in effect from time to time;

(ii)            an amount equal to the annual target bonus for the fiscal year in which the Termination Date occurs (plus any unpaid bonus from the prior fiscal year), to be paid no later than two and a half months following the close of the fiscal year in which the termination occurs;

(iii)           acceleration in full of vesting of all outstanding stock options held by Executive subject to the provision, however, that the acceleration shall not cover more than two (2) years from the Termination Date (and in this regard, all such options and other exercisable rights held by Executive shall remain exercisable for one (1) year following the Termination Date, or through the original expiration date of the stock options or other exercisable rights, if earlier);

(iv)           to the extent COBRA shall be applicable to the Company, continuation of health benefits for Executive, Executive’s spouse and any dependent children, at Executive’s cost, for a period of eighteen (18) months after the Termination Date, subject to such extensions as may be available for election under federal law; and

 

(v)           no other compensation, severance or other benefits, except only that this provision shall not limit any benefits otherwise available to Executive under Section 6(c) in the case of a termination prior to or following a Change in Control.

(f)           Voluntary Termination or Involuntary Termination for Business Reasons . If (A) Executive voluntarily terminates his employment (other than in the case of a Constructive Termination), or (B) Executive is terminated involuntarily for Business Reasons, then in any such event Executive or his beneficiaries shall be entitled to receive the following: (i) salary and the cash value of any accrued Paid Time Off (consistent with the Company’s Paid Time Off policies then in effect) through the Termination Date only, (ii) the right to exercise, for ninety (90) days following the Termination Date, or through the original expiration date of the stock options, if earlier, all stock options held by Executive, but only to the extent vested as of the Termination Date, (iii) to the extent COBRA shall be applicable to the Company, continuation of health benefits for Executive, Executive’s spouse and any dependent children, at Executive’s cost, as applicable under law, provided Executive makes the appropriate election and payments, and (iv) no other compensation, severance, or other benefits.

(g)          Termination Upon Death . If Executive’s employment is terminated because of his death, then Executive’s estate shall be entitled to receive the following:

(i)             salary and the cash value of any accrued Paid Time Off (consistent with the Company’s Paid Time Off policies then in effect) through the Termination Date;

(ii)            an amount equal to the annual target bonus for the fiscal year in which the Termination Date occurs (plus any unpaid bonus from the prior fiscal year), to be paid within two and a half months of the close of the fiscal year in which the death occurred;

(iii)           except in the case of any such termination following a Change in Control to which Section 6(c) applies, acceleration in full of vesting of all outstanding stock options and other equity arrangements (including but not limited to restricted stock, stock appreciation rights, or other equity incentives) subject to vesting and held by Executive subject to the provision, however, that the acceleration shall not cover more than one (1)year from the Termination Date (and in this regard, all such options and other exercisable rights held by Executive shall remain exercisable for one year following the Termination Date, or through the original expiration date of the stock options or other exercisable rights, if earlier);

(iv)          to the extent COBRA shall be applicable to the Company, continuation of health benefits for Executive’s spouse and any dependent children, at their cost, for a period of eighteen (18) months after the Termination Date, or such longer period as may be applicable under law provided such covered beneficiaries make the appropriate elections and payments;

(v)           any benefits payable to Executive or his representatives upon death under insurance or other programs maintained by the Company for the benefit of the Executive; and

 

(vi)           no further benefits or other compensation, except only that this provision shall not limit any benefits otherwise available to Executive under Section 6(c) in the case of a termination following a Change in Control.

 

(g)          Exclusivity . The provisions of this Section 6 are intended to be and are exclusive and in lieu of any other rights or remedies to which Executive or the Company may otherwise be entitled, either at law, tort or contract, in equity, or under this Agreement, in the event of any termination of Executive’s employment. Executive shall be entitled to no benefits, compensation or other payments or rights upon termination of employment other than those benefits expressly set forth in paragraph (b), (c), (d), (e), (f) or (g) of this Section 6, whichever shall be applicable and those benefits required to be provided by law.

(h)          Termination . The word “termination” and any variant thereof with respect to the Executive’s employment shall mean a “separation from service” within the meaning provided by Section 409A. Payments provided for under this Section 6 are contingent upon a termination satisfying this definition.

7.            Set-Off .  If Executive has any outstanding liquidated obligations to the Company at the time this Agreement terminates for any reason (other than a claim for damages unless and until that claim has been confirmed by entry of a final order or judgment of a court of competent jurisdiction), Executive acknowledges that the Company is authorized to deduct any liquidated amounts owed to the Company from his final paycheck and/or from any amounts that would otherwise be due to Executive under this Agreement, to the extent permitted under Code Section 409A.

8.            Books and Records .  Executive agrees that all files, documents, records, customer lists, books and other materials which come into his use or possession during the term of this Agreement which are in any way related to the Company’s business shall at all times remain the property of the Company, and that upon request by the Company or upon the termination of this Agreement for any reason, Executive shall immediately surrender to the Company all such property and copies thereof.

9.            Restrictive Covenants .  Executive acknowledges that the restrictions contained in this Section 9 are reasonable and necessary to protect the legitimate business interests of the Company, and will not impair or infringe upon his right to work or earn a living after his employment with the Company ends.

(a)           Trade Secrets and Confidential Information .  Executive represents and warrants that:  (i) he is not subject to any agreement that would prevent him from performing his Duties for the Company or otherwise complying with this Agreement, and (ii) he is not subject to or in breach of any non-disclosure agreement, including any agreement concerning trade secrets or confidential information owned by any other party, that would adversely affect the performance of his Duties for the Company or otherwise adversely affect his compliance with this Agreement.

 

Executive agrees that he will not:  (i) use, disclose, or reverse engineer the Trade Secrets or the Confidential Information, except as authorized by the Company; (ii) during Executive’s employment with the Company, use, disclose, or reverse engineer (A) any confidential information or trade secrets of any former employer or third party, or (B) any works of authorship developed in whole or in part by Executive during any former employment or for any other party, unless authorized in writing by the former employer or third party; or (iii) upon Executive’s resignation or termination (A) retain Trade Secrets or Confidential Information, including any copies existing in any form (including electronic form), which are in his possession or control, or (B) destroy, delete, or alter the Trade Secrets or Confidential Information without the Company’s consent.

The obligations under this Section 9(a) shall remain in effect (i) with regard to the Trade Secrets, for as long as the information constitutes a trade secret under applicable law, and (ii) with regard to the Confidential Information, for a period of five (5) years from the Termination Date.

After termination of Executive’s employment, nothing in this Agreement will prohibit Executive from using his general skills, knowledge and experience developed in positions with the Company or other employers, provided that Executive does not use Trade Secrets or Confidential Information of the Company or its customers or suppliers or retain any tangible copies of such Trade Secrets or Confidential Information or disclose such Trade Secrets or Confidential Information.

 

(b)          Non-Solicitation of Customers .  During the Restricted Period, Executive will not solicit any Customer of the Company for the purpose of providing any goods or services competitive with the goods or services offered by the Company.  The restrictions in this Section 9(b) apply only to the Customers with whom Executive had Contact.

(c)           Non-Solicitation of Employees .  During the Restricted Period, Executive will not, directly or indirectly, solicit, recruit or induce any Employee (other than clerical staff such as secretaries or receptionists) to (i) terminate his or her employment relationship with the Company, or (ii) work for any other person or entity engaged in a business that offers goods or services directly competitive with those goods or services offered by the Company (a “ Competing Business ”), provided that general solicitation of employees in printed or other general media that do not target the employees of the Company specifically and general recruiting by a company Executive is later employed by or associated with that does not use any of his knowledge shall not constitute a violation of this provision.

(d)          Noncompete Covenants .  During the Restricted Period, Executive shall not, on his behalf, or on behalf of any Competing Business, perform for the benefit of any Competing Business (i) any of the Duties, or (ii) any activities which are substantially similar to those Duties.  Notwithstanding the foregoing, this Section 9(d) shall not apply in the event of a termination of employment governed by Section 6(b) or 6(c) of this Agreement.  Nothing in this Agreement shall be construed to prohibit Executive from performing activities which he did not perform for Company.

 

10.          Work Product .  Executive’s Duties may include inventing in areas directly or indirectly related to the business of the Company or to a line of business of the Company or to a line of business that the Company may reasonably be interested in pursuing.  All Work Product shall constitute work made for hire.  If (a) any of the Work Product may not be considered work made for hire, or (b) ownership of all right, title, and interest to the legal rights in and to the Work Product will not vest exclusively in the Company, then, without further consideration, Executive assigns all preexisting Work Product to the Company and agrees to assign, and automatically assign, all future Work Product to the Company.

The Company will have the right to obtain and hold in its own name copyrights, patents, design registrations, proprietary database rights, trademarks, rights of publicity, and any other protection available in the Work Product.  At the Company’s request, Executive agrees to perform, during or after his employment with the Company, (provided that after his employment the Company shall pay Executive reasonable compensation and expenses for) any acts to transfer, perfect and defend the Company’s ownership of the Work Product, including, but not limited to:  (i) executing all documents (including a formal assignment to the Company) necessary for filing an application or registration for protection of the Work Product (an “Application”), (ii) explaining the nature of the Work Product to persons designated by the Company, (iii) reviewing Applications and other related papers, or (iv) providing any other assistance reasonably required for the orderly prosecution of Applications.

Upon request of the Company, Executive agrees to provide the Company with a written description of any Work Product in which he is involved (individually or jointly with others) and the circumstances surrounding the creation of such Work Product.

11.          Licenses .  To the extent applicable, if at all, Executive grants to the Company an irrevocable, nonexclusive, worldwide, royalty-free, perpetual license to:  (i) make, use, sell, copy, perform, display, distribute, or otherwise utilize copies of the Licensed Materials, (ii) prepare, use and distribute derivative works based upon the Licensed Materials, and (iii) authorize others to do the same.  Executive shall notify the Company in writing of any Licensed Materials he delivers to the Company.

12.          Use of Likeness and Release .  Executive consents to the Company’s use of his image, likeness, voice or other characteristics in the Company’s products or services during his employment and thereafter for one (1) year as to works created during his employment, provided that no new works created after the end of his employment shall include his image, likeness, voice or other characteristics in the Company’s products or services.  Executive releases the Company from any claims which he has or may have for invasion of privacy, right of publicity, defamation, copyright infringement, or any other causes of action arising out of the use, distribution, adaptation, reproduction, broadcast, or exhibition of such characteristics.

 

 

13.          Definition of Terms . The following terms referred to in this Agreement shall have the following meanings:

(a)          “ Business Reasons ” means (i) gross negligence, willful misconduct or other willful malfeasance by Executive in the performance of his Duties, (ii) Executive’s conviction of a felony, or any other criminal offense involving moral turpitude, (iii) Executive’s material breach of this Agreement, including, without limitation, any repeated breach of Section 14 hereof or of any provision of any confidentiality, non-disclosure or non-competition agreements between the Company and Executive, provided that, in the case of any such breach, the Board provides written notice of breach to the Executive, specifically identifying the manner in which the Board believes that Executive has materially breached this Agreement, and Executive shall have the opportunity to cure such breach to the reasonable satisfaction of the Board within thirty (30) days following the delivery of such notice. For purpose of this Section 13(a), no act or failure to act by Executive shall be considered “willful” unless done or omitted to be done by Executive in bad faith or without reasonable belief that Executive’s action or omission was in the best interests of the Company or its affiliates. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of the Company. The Board must notify Executive of any event constituting Business Reasons within ninety (90) days following the Board’s actual knowledge of its existence (which period shall be extended during the period of any reasonable investigation conducted in good faith by or on behalf of the Board) or such event shall not constitute Business Reasons under this Agreement.

(b)         “ Disability ” shall have the same meaning as set forth in the long-term disability plan maintained by the Company, or if none, shall mean that Executive has been unable to perform his Duties as an employee as the result of his incapacity due to physical or mental illness, and such inability, at least twenty-six (26) weeks after its commencement, is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to Executive or Executive’s legal representative (such Agreement as to acceptability not to be unreasonably withheld). Termination resulting from Disability may only be effected after at least sixty (60) days written notice by the Company of its intention to terminate Executive’s employment. In the event that Executive resumes the performance of substantially all of his Duties hereunder before the termination of his employment becomes effective, the notice of intent to terminate shall automatically be deemed to have been revoked.

(c)          “ Termination Date ” shall mean (i) if this Agreement is terminated on account of death, the date of death; (ii) if this Agreement is terminated for Disability, the date specified in Section 13(b); (iii) if this Agreement is terminated by the Company, the date which is indicated in a notice of termination is given to Executive by the Company in accordance with Sections 6(a) and 15(a); (iv) if the Agreement is terminated by Executive, the date which is indicated in a notice of termination given to the Company by Executive in accordance with Sections 6(a) and 15(a); or (v) if this Agreement expires by its terms, then the last day of the term of this Agreement.

(d)         “ Constructive Termination ” shall be deemed to occur if (A) (1) Executive’s position changes as a result of an action by the Company such that (w) Executive shall no longer be President of WMI, (x) Executive shall have duties and responsibilities demonstrably less than those typically associated with a President of a wholly owned subsidiary, or (y) Executive shall no longer report directly to the Company’s Board, or (2) Executive is required to relocate his place of employment, other than a relocation within fifty (50) miles of Executive’s current residence in Georgia or the Company’s current Atlanta, Georgia headquarters, (3) there is a reduction in Executive’s base salary or target bonus other than any such reduction consistent with a general reduction of pay across the executive staff as a group, as a documented economic or strategic measure due to poor financial performance by the Company, (4) there occurs any other material breach of this Agreement by the Company (other than a reduction of Executive’s base salary or target bonus which is not described in the immediately preceding clause), or (5) after a written demand for substantial performance is delivered to the Board by Executive which specifically identifies the manner in which Executive believes that the Company has materially breached this Agreement, and the Company has failed to cure such breach to the reasonable satisfaction of Executive within thirty (30) days following the delivery of such notice, and (B) within the ninety-day (90) period immediately following an action described in clauses (A)(1) through (4), Executive elects to terminate his employment voluntarily.

(e)          A “ Change in Control ” shall be deemed to have occurred if:

(i)            any “Person,” as such term is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) (other than (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or (iii) any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), becomes the “ Beneficial Owner ” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 51% or more of the combined voting power of the Company’s then-outstanding securities;

(ii)            the stockholders of the Company approve any transaction or series of transactions under which the Company is merged into or consolidated with any other company, other than a merger or consolidation (A) which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 66 2/3% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, and (B) after which no Person holds 20% or more of the combined voting power of the then-outstanding securities of the Company or such surviving entity;

(iii)           the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets;

(iv)           the Board adopts a resolution to the effect that, for purposes of this Agreement, a Change in Control has occurred, provided that such Change in Control meets the definition of a change in control set forth under Code Section 409A; or

(v)           a majority of the Board is replaced in a twelve-month (12) period by directors whose appointment or election was not endorsed by a majority of the Board before their appointment or election.

 

(f)          " Company " means, as appropriate based on the context, either WES Consulting, Inc., or WES Consulting, Inc. and each of its subsidiaries, affiliates and all related companies, including, but not limited to, WMI.

 

(g)         " Confidential Information " means information of the Company, to the extent not considered a Trade Secret under applicable law, that (i) relates to the business of the Company, (ii) possesses an element of value to the Company, (iii) is not generally known to the Company's competitors, and (iv) would damage the Company if disclosed.  Confidential Information includes, but is not limited to, (i) future business plans, (ii) the composition, description, schematic or design of products, future products or equipment of the Company, (iii) communication systems, audio systems, system designs and related documentation, (iv) advertising or marketing plans, (v) information regarding independent contractors, employees, clients and customers of the Company, and (vi) information concerning the Company's financial structure and methods and procedures of operation.  Confidential Information shall not include any information that (i) is or becomes generally available to the public other than as a result of an unauthorized disclosure, or (ii) has been independently developed and disclosed by others without violating this Agreement or the legal rights of any party.

 

(h)         " Contact " means any interaction between Executive and a Customer which (i) takes place in an effort to establish, maintain, and/or further a business relationship on behalf of the Company, and (ii) occurs during the last year of Executive’s employment with the Company (or during his employment if employed less than a year).

 

(i)           " Customer " means any person or entity to whom the Company has sold its products or services, or solicited to sell its products or services.

 

(j)           " Employee " means any person who (i) is employed by the Company at the time Executive’s employment with the Company ends, (ii) was employed by the Company during the last year of Executive’s employment with the Company (or during his employment if employed less than a year), or (iii) is employed by the Company during the Restricted Period.

 

(k)          " Licensed Materials " means any materials that Executive utilizes for the benefit of the Company, or delivers to the Company or the Company's customers, which (i) do not constitute Work Product, (ii) are created by Executive or of which he is otherwise in lawful possession, and (iii) Executive may lawfully utilize for the benefit of, or distribute to, the Company or the Company's customers.

 

(l)           " Restricted Period " means the time period during Executive’s employment with the Company, and for two (2) years after the Termination Date.

 

(m)         " Trade Secrets " means information of the Company, and its licensors, suppliers, clients and customers, without regard to form, including, but not limited to, technical or nontechnical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or a list of actual or potential customers or suppliers which is not commonly known by or available to the public and which information (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

 

(n)         " Work Product " means (i) any data, databases, materials, documentation, computer programs, inventions (whether or not patentable), designs, and/or works of authorship, including, but not limited to, discoveries, ideas, concepts, properties, formulas, compositions, methods, programs, procedures, systems, techniques, products, improvements, innovations, writings, pictures, audio, video, images of Executive (subject to Section 12 of this Agreement), and artistic works, and (ii) any subject matter protected under patent, copyright, proprietary database, trademark, trade secret, rights of publicity, confidential information, or other property rights, including all worldwide rights therein, that is or was conceived, created or developed in whole or in part by Executive while employed by the Company and that either (A) is created within the scope of Executive’s employment, (B) is based on, results from, or is suggested by any work performed within the scope of Executive’s employment and is directly or indirectly related to the business of the Company or a line of business that the Company may reasonably be interested in pursuing, (C) has been or will be paid for by the Company, or (D) was created or improved in whole or in part by using the Company's time, resources, data, facilities, or equipment.

14.          No Conflicts. Executive agrees that during the Employment Term he will not enter into, in his individual capacity, any agreement, arrangement or understanding, whether written or oral, with any supplier, contractor, distributor, wholesaler, sales representative, representative group or customer, relating to the business of the Company or any of its subsidiaries, without the express written consent of the Company.

15.          Miscellaneous Provisions.

(a)           Notice . All communications contemplated by this Agreement shall be in writing, shall be effective when given, and in any event shall be deemed to have been duly given (i) when delivered, if personally delivered, (ii) three (3) business days after deposit in the U.S. mail, if mailed by U.S. registered or certified mail, return receipt requested, or (iii) one (1) business day after the business day of deposit with Federal Express or similar overnight courier, if so delivered, freight prepaid. In the case of Executive, notices shall be addressed to him at the home address which he most recently communicated to the Company in writing. In the case of the Company, notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Corporate Secretary.

(b)          Notice of Termination . Any termination by the Company or Executive shall be communicated by a notice of termination to the other party hereto given in accordance with paragraph (a) hereof. Such notice shall indicate the specific termination provision in this Agreement relied upon.

(c)           Successors .

 

(i)             Company’s Successors. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall be entitled to assume the rights and shall be obligated to assume the obligations of the Company under this Agreement and shall agree to perform the Company’s obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets which executes and delivers the assumption agreement described in this Section 15(c)(i) or which becomes bound by the terms of this Agreement by operation of law.

(ii)            Executive’s Successors. The terms of this Agreement and all rights of Executive hereunder shall inure to the benefit of, and be enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

(iii)           No Other Assignment of Benefits. Except as provided in this Section 15(c), the rights of any person to payments or benefits under this Agreement shall not be made subject to option or assignment, either by voluntary or involuntary assignment or by operation of law, including (without limitation) bankruptcy, garnishment, attachment or other creditor’s process, and any action in violation of this subsection (iii) shall be void.

(d)          Waiver . No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by Executive and by an authorized officer of the Company (other than Executive). No waiver by either Party of any breach of, or of compliance with, any condition or provision of this Agreement by the other Party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

(e)           Entire Agreement . This Agreement shall supersede any and all prior agreements, representations or understandings (whether oral or written and whether express or implied) between the parties with respect to the subject matter hereof.

(f)            Severability . The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

(g)           Arbitration and Governing Law . Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by binding arbitration in Atlanta, Georgia, in accordance with the rules of the American Arbitration Association then in effect (the “ AAA Rules ”).  Any arbitration will be conducted by a single arbitrator selected according to the AAA Rules. Judgment may be entered on the arbitrator’s award in any court having competent jurisdiction. No party shall be entitled to seek or be awarded punitive damages. Nothing in this Section 15(g) shall be construed to prohibit the Company from seeking injunctive relief from a court of competent jurisdiction pursuant to Section 15(h), below.  All attorneys’ fees and costs shall be allocated or apportioned as agreed by the parties or, in the absence of an agreement, in such manner as the arbitrator or court shall determine to be appropriate to reflect the final decision of the deciding body as compared to the initial positions in arbitration of each party. This Agreement shall be construed in accordance with and governed by the laws of the State of Georgia, without regard to its principles of conflicts of law, as they apply to contracts entered into and wholly to be performed within such State by residents thereof.

 

(h)          Injunctive Relief .  Executive hereby agrees that if he breaches Sections 8, 9, 10 or 11 of this Agreement:  (i) the Company will suffer irreparable harm; (ii) it would be difficult to determine damages, and monetary damages alone would be an inadequate remedy for the injuries suffered by the Company, and (iii) if the Company seeks injunctive relief to enforce this Agreement, Executive will waive and will not (a) assert any defense that the Company has an adequate remedy at law with respect to the breach, or (b) require that the Company submit proof of the economic value of any Trade Secret or Confidential Information.  Nothing contained in this Agreement shall limit the Company’s right to any other remedies at law or in equity.

(i)            Employment Taxes . All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.

(j)            Indemnification . In the event Executive is made, or threatened to be made, a party to any legal action or proceeding, whether civil or criminal, by reason of the fact that Executive is or was a director or officer of the Company or serves or served any other entity of which the Company owns 50% or more of the equity in any capacity, Executive shall be indemnified by the Company, and the Company shall pay Executive’s related expenses when and as incurred, all to the full extent permitted by law, pursuant to Executive’s existing indemnification agreement with the Company, if any, in the form made available to all other officers and directors, or, if it provides greater protection to Executive, to the maximum extent allowed under the law of the State of the Company’s incorporation.

(k)           Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

(l)            Six-Month Waiting Period . Notwithstanding anything to the contrary, to the extent that any payments under this Agreement are subject to a six-month (6) waiting period under Code Section 409A, any such payments that would be payable before the expiration of six months following the Executive’s separation from service but for the operation of this sentence shall be made during the seventh (7th) month following the Executive’s separation from service.

(m)          Reimbursement of Expenses . Reimbursements under this Agreement shall only be made for expenses incurred during the term of this Agreement. Any reimbursements made under this Agreement shall be made by the end of the fiscal year following the fiscal year in which the expense was incurred, and the amount of the reimbursable expenses or in-kind benefits provided in one fiscal year shall not increase or decrease the amount of reimbursable expenses or in-kind benefits provided in a subsequent fiscal year. In order to receive reimbursements under this Agreement, the Executive shall provide any required supporting documentation by a date reasonably specified by the Company in accordance with the deadlines set forth in this section.

 

(n)          Section 409A of the Code . It is intended that the payments and benefits provided for by this Agreement comply with the requirements of Section 409A, and this Agreement shall be administered and interpreted in a manner consistent with such intention.

(o)          Survival .  Those Sections of this Agreement which, by their express wording or inherent nature, are applicable to circumstances arising after the Termination Date, shall survive the expiration or earlier termination of this Agreement, including, without limitation, Section 6 (Severance Benefits), Section 7 (Set-Off), Section 8 (Books and Records), Section 9 (Restrictive Covenants), Section 10 (Work Product), Section 11 (Licenses), Section 12 (Use of Likeness and Release), Section 13 (Definitions), and Section 15 (Miscellaneous Provisions).

16.          Affirmation .  Executive acknowledges that he has carefully read this Agreement, he knows and understands its terms and conditions, and he has had the opportunity to ask the Company any questions he may have had prior to signing this Agreement.

 

[Signature Page Follows]

 

IN WITNESS WHEREOF, each of the Parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the Effective Date.